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THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
POLICY
Date:
GAIN Report Number:
Approved By:
Prepared By:
Report Highlights:
Malaysia’s retail sector is forecast to grow at 3 percent due to cautious consumer spending, increased
subsidy rationalization and introduction of a new goods and services tax. U.S. fresh fruit, fresh and
frozen potatoes, dairy products, snack foods (including nuts), prepared grocery products, and pet food
have good prospects.
Post:
Kuala Lumpur
Abdul Ghani Wahab
Joani Dong
Annual 2016
Retail Foods
Malaysia
MY6011
11/21/2016
Required Report - public distribution
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 2
Table of Contents
1. Malaysia in profile ............................................................................................................. 3
2. Food retail market summary ........................................................................................... 3
2.1 Malaysia’s food retail sector in overview .................................................................... 5 2.2 Advantages and challenges for US exporters ............................................................. 8
3. Road map for market entry .............................................................................................. 9 3.1 Supermarket, hypermarket and department stores ................................................... 9
3.2 Convenience stores and petrol station stores............................................................. 12 3.3 Traditional stores including provision, grocery and sundry shops ......................... 13
4. Competition in the sector ............................................................................................... 14
5. Best products prospects .................................................................................................. 20
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 3
Executive Summary:
1. Malaysia in profile
Malaysia is one of the more affluent nations in Asia with a GDP per-capita of US$10,000 in 2015. The
economy is mixed comprising of strong agricultural, services and manufacturing industries. The
economy grew 5 percent in 2015, higher than expected due to strong domestic demand. Moderate
growth of 4-4.6 percent continues in 2016 despite the uncertainty globally, fiscal consolidation and
cheaper oil prices. The economy is expected to expand 4.6 percent in 2016.
Malaysia has a multi-racial population of 31.4 million, all of whom are multi-lingual, speaking at least
two languages fluently, including English which is widely used for business. Malaysia has a young
population with almost 70 percent in the 15-64 year age range. Some 97 percent of the working
population continues to be gainfully employed. About half of the population is in the middle to high
income group with growing purchasing power. Lifestyles are becoming more sophisticated and modern,
leading to increasing consumption of imported food and beverages from western countries. Today,
Malaysia provides a significant pool of active consumers who continue to change eating habits, leading
to increased consumption of imported food and beverages.
2. Food retail market summary Malaysia has a large and growing food retail market supplied by local and imported products. Total
retail sales of food and beverages total US$16 billion. The Retail Group Malaysia is predicting an
overall growth of 3.1 percent this year, the slowest in five years. Retailers face higher cost of doing
business with the depreciation of Malaysian Ringgit and government increased subsidy rationalization.
Consumers are also cautious about spending with the introduction of a new goods and services tax
(GST) of 6 percent in April 2015.
Reduced spending power due to the introduction of GST saw the scaling down of festive promotions.
Most retail outlets have gone from a month to only two weeks before major holidays.
The Table below provides an overview of the size of the import market for food and beverage products
over the five years to 2015.
Imports of Food and Beverage Products (US$ million)
2011 2012 2013 2014 2015
Meat & meat preparations 661 713 805 889 863
Fish & fish Preparations 862 906 889 960 779
Dairy products, eggs & honey 817 842 1,012 1,169 872
Edible vegetables 737 709 824 760 891
Edible fruits & nuts 364 415 505 527 629
Coffee, tea, mate & spices 475 437 468 553 494
Processed meat, fish & seafood 98 129 140 135 145
Sugar & sugar preparations 1,095 1,175 1,074 1,138 838
Processed cocoa products 1,300 1,167 1,086 1,314 1,081
Processed cereal products 612 660 724 789 750
Processed vegetables and fruits 267 293 320 313 341
Miscellaneous processed foods 732 868 940 943 914
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 4
Beverages 586 685 778 718 685
Total 8,606 8,999 9,565 10,208 9,282
Sources: Global Trade Atlas (GTA)
Malaysia imported $9.3 billion of food and beverage products in 2015, a decrease of 9% from the
previous year. Imports of food products will likely grow moderately for the next two years.
Malaysia has a significant and growing food manufacturing industry. According to the Malaysian
Investment Development Authority (MIDA), Malaysia exported food products worth RM20 billion
(USD5.5 billion) to more than 200 countries, of which, processed food contributed about RM13 billion
(USD3.6 billion). The industry is involved in the manufacture of alcoholic and non-alcoholic beverages,
dairy products, cooking oil, coffee and tea, cereal-based foods, spices and spice mixes, sauces and
condiments, processed fish and meat products, chocolate and snacks, baked products and other cooked
food preparations, including frozen foods.
The halal factor
With a Muslim population of 60 percent, the demand for halal foods by
Malaysian consumers has increased over the years. Foreign meat (except
pork) and poultry plants intending to export to Malaysia must be accredited
by the Malaysian Department of Veterinary Services and the Department of
Islamic Development for halal purposes. The Malaysian halal standards are
perceived as stricter than those of other Islamic countries. Hence,
opportunities to increase exports of meat (except pork) and poultry hinge
on halal approval.
In recent years, the expectation of halal standard in food products have
extended from meat and meat products to nonmeat-based products such
snacks, confectionery, dairy, bakery, etc. The Malaysian government and
many companies are marketing the halal standards as a new benchmark for
quality, hygiene and safety. Food products and ingredients that have halal
certificates are perceived to have added marketing value in Malaysia. Hence, most retailers, foodservice
operators and food manufacturers are inclined to ask for halal certificates for non-meat based food
products and ingredients.
Under the newly amended Trade Description Act 2011 for the halal certification and marking for
products intended for Muslim consumers, imported food destined for Muslim consumers has to be
certified halal by one of the Islamic centers in the States approved by the Malaysian Islamic authority
(JAKIM).
(http://www.halal.gov.my/v4/index.php/en/badan-islam/badan-luar-negara-diiktiraf)
Halal certified U.S. turkey
(Source: FAS Kuala Lumpur)
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 5
2.1 Malaysia’s food retail sector in overview
The food retail sector continues to remain fragmented, with 56 percent comprised of small retailers
operating in provision shops, grocery stores and other non-air conditioned sundry shops throughout the
country.
The bulk of retail food sales are channeled through traditional stores, such as provision stores, grocery
stores, specialty food stores and other sundry shops. This sub-sector commands close to 56 percent of
total food sales today. Modern stores such as supermarkets, hypermarkets and department stores with
supermarkets make up 43% of the nationwide retail food market. Convenience stores are insignificant,
with only about 1% share of the nationwide retail food market.
Online retailing is starting to gain traction in Malaysia, with TESCO taking the initiative in 2014 where
customers can purchase online have groceries delivered to their doorsteps. Online trading websites like
Lazada, 11street and MilkADeal also offering non-perishable food products besides usual non-food
consumer items.
Malaysia's food retail sector is made up of:
1. Large food retail stores such as supermarkets and hypermarkets
Large food retail stores such as supermarkets, hypermarkets and department stores that also operate
supermarkets within the premises are largely located in the major cities, urban centers and larger towns
in Malaysia, where most middle to high income consumers reside. Major food retailers usually operate
chain stores strategically located to capture their target consumers.
The major food retail operators active in this sub-sector include:
The Cold Storage Group, the largest food retailer in Malaysia in terms of sales as well as number
of retail outlets. It operates hypermarkets and supermarkets nationwide under the Giant, Cold
Storage and Jason brands. The Giant supermarkets and hypermarkets are known as a home-
grown trusted brand. Giant is well-known to local shoppers as the store that offers the best
value-for-money products. Giant targets the mass market and is the largest supermarket chain in
Malaysia. Cold Storage and Jason target the upper middle to high income shoppers as well as
high income expatriates residing in Malaysia. It carries a wide variety of local products as well
as imported products, especially products from Europe, USA, Canada, Australia, New Zealand,
South Africa and some Latin American countries.
Tesco Malaysia is one of the largest food retailer in Malaysia in terms of sales. It operates Tesco
and Tesco Extra stores in the major cities in Malaysia. Tesco Malaysia is aggressively targeting
the mass market with its competitively priced products. It carries mainly locally sourced
products as well as a sizeable proportion of imported products, and has the widest selection of
price competitive products from the United Kingdom. Tesco is the only retailer in Malaysia that
offers grocery on-line shopping covering certain Klang Valley areas. Its own private brands
such as Tesco Value, Choice, Finest as well as Light Choice are popular among the consumers.
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 6
AEON Malaysia which operates the Jusco Stores nationwide. Jusco is the largest high end
department store chain in Malaysia that also operates a full scale supermarket within its stores.
Jusco operates high end stores that target middle to high income shoppers. It carries a wide
variety of local premium branded products as well as imported products. It also carries the
widest selection of products from Japan. AEON became the second-largest retail group in
Malaysia after bought over Carrefour Malaysia in 2012 and renamed it to AEON Big.
Other popular Malaysian owned premium supermarkets carry a very wide variety of imported
food products are Jaya Grocer (the fastest growing local chain) & Hock Choon, Village Grocer,
Ampang Grocers, BIG (Bens Independent Grocer) and the latest addition, Sam’s Groceria.
These outlets target the middle to high income shoppers and more than 50% of their products are
imported.
The demand for premium groceries is growing in Klang Valley, and premium supermarkets have an
increasing presence with more players and outlets in recent years. These outlets that target the middle to
high income locals and expatriates carry more varieties and higher volumes of imported branded
products from western countries such as Australia, New Zealand, the USA, Canada, France, Italy, the
United Kingdom and other parts of Europe.
Such products would include fresh produce such as chilled beef
and lamb, fresh temperate fruits and vegetables, chilled cold
water fish such as salmon, frozen vegetables, sausages,
delicatessen meats, pastry and pies, dairy products, high end
biscuits and cookies, confectionery such as premium/branded
chocolates and candies, potato based snacks, canned fruits,
canned soups, canned meat, breakfast cereals, pasta, sauces,
spices, seasonings, dressings, ready meals (frozen), home
bakery ingredients, fruit juices, jams and jellies, peanut butter,
non-alcoholic beverages and wines, beer and other alcoholic
beverages.
In addition, retailers such as Giant, Cold Storage, Tesco and Aeon carry products under their
house/retailer brands which may be priced at 10% or more lower than comparable products, to attract
the price conscious customers from the lower to middle income group.
These large retail stores also offer additional services such as in-store “wet markets”, bakeries, wine
corners, alcoholic beverage corners, and health food corners as well as counter serving ready-to-
consume meals and snacks to attract more customers to their stores.
In addition, supermarket operators such as Jaya Grocer, Bangsar Village Grocer and BEN Independent
Stores, offer in-store cooking demonstration and in-store dine-in facilities. For the cooking demo, the in-
house supermarket chef prepares dishes available at the supermarket with recipe pamphlets given to
customers. The demonstrations usually take place during weekend and certain times of the day. As for
the dine-in facility, customers may purchase fresh produce from the supermarket where it is cooked by
U.S. cherries in hot demand
(Source: FAS Kuala Lumpur)
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 7
the supermarket chef and served there. These arrangements have proven to be popular among urban
dwellers. Supermarkets offering such facilities had been increasing in numbers.
Other emerging services include on-line internet shopping with home deliveries. All the conveniences
offered by these stores have encouraged an increasing number of middle to high income Malaysians to
shop for their grocery needs at supermarkets and hypermarkets on an increasingly regular basis.
Hypermarkets which are popular with wide range and value for money products continue to proliferate
and opening outlets in suburban and second tier cities.
2. Convenience stores and petrol station stores
Convenience stores and petrol station stores are mainly found in the cities, larger towns and along the
North-South highway. The majority of these stores are franchise operations with support from their
franchisors in the form of advertising support, staff training, financing, bulk purchasing and distribution
facilities.
7-Eleven is the largest convenience store chain operating 24-hour stores. 7-Eleven stores are treated like
“truck shops” by children, teenagers and young adults who usually shop for magazines, newspapers,
candies, chips and other snacks, ice cream or other single-serve food and beverages consumed “on-the-
go.” Petrol station stores are also used in a similar manner by drivers and their passengers, who are
usually in a hurry and would not normally browse in such stores. For that reason, most individual sales
made are small in value.
These air-conditioned stores generally carry a smaller range of popular processed and packaged food
and beverage products compared to those carried by the supermarkets/hypermarkets. They also carry
microwaveable food products which may be heated at the store for immediate consumption. In addition,
convenience stores and petrol station stores also serve ready-to-consume food and beverages such as
sandwiches, fried rice, fried noodles, nasi lemak and other Asian cooked dishes, buns, curry puffs and
alike, ready-to drink hot coffee or tea, soft drinks and other beverages. They generally do not carry
perishable products such as chilled meat, fish and seafood, fresh fruits and vegetables. Most of the
products are in single-serve packaging or in smaller packaging than those carried by the
supermarkets/hypermarkets.
However, the retail price is generally higher in convenience stores and petrol station stores than at
supermarkets/hypermarkets.
3. Traditional stores including provision, grocery and sundry shops
Traditional stores continue to make up the largest number of food retailers in Malaysia today. They are
commonly found in all the cities, towns and villages in Malaysia. They are made up of open-fronted
grocery stores in shop houses or in the dry markets. This sub-sector is dominated by small family-run
businesses and target the price sensitive consumers as well as those who seek convenience, particularly
housewives who prefer to shop daily for a small number of grocery items and other daily essentials. In
2011, under the National Key Economic Areas (NKEAs) identified by the government as a key driver of
domestic consumption and to spur economic growth, the government introduced the ‘Small Retailers
Transformation Program’ (TUKAR) to facilitate the modernization of 5,000 traditional sundry shops
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 8
nationwide by 2020. This program, however, faced criticism from participants as it lead to higher
operation costs due to loan repayment traditional sundry shops needed to incur to modernize their
shops, resulting in some of the participants having to close down operations.
These retail stores generally carry local traditional and Asian products and some branded products with
a small number of the more popular imported food and beverage products from western countries. Their
competitive advantage is in their carrying products ordinarily demanded by local households and
retailed at competitive prices.
It should be noted that these non-air conditioned stores are usually operated as specialist stores that
carry only halal products targeted at the Muslim community, or mainly Chinese products targeted at the
Chinese community or mainly Indian products targeted at the Indian community. A number of stores in
the cities and larger towns have upgraded to the mini-market concept by trying to compete against
major supermarkets/hypermarkets, targeting all the races, offering better shopping ambiance with more
organized shelves, wider aisle, brighter and cleaner environment, check-out counters, more varieties of
branded products and alike, while still maintaining the friendly neighborly atmosphere.
2.2 Advantages and challenges for US exporters
Advantages Challenges
Malaysia’s economy is still showing positive
growth and forecast to continue to grow and the
food retail market is also continuing to expand.
Most imported food and beverage products
attract low import duties and Customs Duties
(except for alcoholic drinks).
The Muslim population (around 60 percent of
the total population) demands Halal products.
U.S. products need to comply with this religious
requirement.
U.S. products and brands are already well-known
and well represented in the food retail market. In
addition, U.S. products have a high quality
reputation. This enables new-to-market U.S.
products an easier access into the retail market
because the major retailers are more willing to
carry U.S. products than products from other
lesser known countries.
In addition, the Cold Storage Group outlets that
target western expatriates as well as the high end
retailers such as BIG, Village Grocers, Jaya
Grocer already carry large quantities and a
relatively wide variety of imported food products
from the USA.
Malaysia, Australia, New Zealand, France,
China, India and other ASEAN countries
continue to be strong competitors in the food
retail market. Their products compete on quality
and price against a number of comparable U.S.
products.
U.S. products are generally perceived as not as
price competitive as similar products from
countries such as Australia and New Zealand.
Young Malaysians, including young adults, are
increasingly adopting U.S. culture and trends.
This is positive for U.S. food products.
New-to-market U.S. products do not necessarily
fit local demand on taste and packaging size.
Past marketing efforts by U.S. organizations Strong local products and brands exist which
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 9
have raised the profile of a range of U.S.
products in the eyes of consumers and retailers,
e.g. fresh temperate fruits, dried fruits, frozen
food, etc. Such activities serve to not only
increase awareness and consumption of U.S.
products but also increase the perception of U.S.
products as high quality products.
dominate their markets to the near exclusion of
imported products, e.g. fresh vegetables,
chicken, soft drinks, mineral water, cordials,
beer, chocolates, biscuits and cookies, cereal-
based snacks and some dairy products.
A wide variety of foreign products already “fit”
into local food culture, e.g. yoghurt, ice cream,
potato and cereal based snacks, infant food,
temperate fruits and vegetables, soft drinks and
other non-alcoholic drinks such as cordials. This
trend will continue into the future as more
Malaysians modernize their diets.
Certain U.S. products are not readily accepted
by many Malaysians and so are ignored, e.g.
turkey, snack products, ready-to-consume
prepared meals. Some U.S. products do not
readily fit into the local food culture. To expand
demand for these products, Malaysians need to
be educated on how such products should be
best consumed, prepared or localized so that
these products become entrenched into their
diet.
3. Road map for market entry
3.1 Supermarket, hypermarket and department stores
3.1.1 Company profiles
The table below provides information on the major retailers involved in the operation of supermarkets
and hypermarkets.
Retailer
Name and
Outlet Type Ownership No. of Outlets Location
Purchasing Agent
Type
Cold Storage/
Giant/Jason/
Mercato
Local company,
subsidiary of Dairy
Farm International of
Hong Kong
21 Cold Storage
supermarkets and
131 Giant
hypermarkets.
Giant is a trusted
retail name in
Malaysia.
Nation-wide Direct sourcing
preferred with a
number of
preferred agents
used.
Aeon Big Formerly Car-
refour;acquired by
Japanese Aeon Co
Ltd in Oct. 2012 and
renamed Aeon BIG
28 hypermarkets
Major cities Group sourcing
direct from
suppliers is
preferred.
AEON Operated by AEON
Co (M) Bhd, listed
on the stock ex-
change. Parent
company is AEON
31 department
store, with a
significantly large
super-market
section
Major cities Sources directly
from local and
overseas suppliers
where ever possible
for bulk purchases.
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 10
Group, Japan. Local agents used
for smaller orders.
Tesco Tesco Stores
(Malaysia) Sdn Bhd,
joint venture be-
tween Tesco UK and
Sime Darby Bhd.
56 Tesco
hypermarkets and
Tesco Extra
hypermarkets
Major cities Sources directly
from local and
overseas suppliers
where ever possible
for bulk purchases.
Local agents used
for smaller orders.
Jaya
Grocer/Hock
Choon
Local family own;
Trendcell Sdn. Bhd.
15 upmarket
supermarkets; also
own Hock Choon
Super-market that
caters to expatriate
communities
Klang
Valley
(Kuala
Lumpur &
Selangor)
Sources directly
from local and
overseas suppliers.
Sam’s
Groceria
Local parent
company -Mydin
Mohamed Holdings
Bhd.
6 supermarkets Penang,
Klang
Valley
(Kuala
Lumpur &
Selangor)
Sources directly
from local
importers
Village
Grocer
Local family own 4 upmarket
supermarkets
Klang
Valley
(Kuala
Lumpur &
Selangor)
Sources directly
from local and
overseas suppliers.
3.1.2 Entry strategy
The U.S. exporter should consider the following when selecting major retailers with whom to partner in
Malaysia:
The financial strength of the retailer and its volume of business.
The level of interest and commitment by the retailer in carrying imported U.S. products.
The number and location of retail outlets that target western expatriates and middle to high
income local consumers residing in urban centers.
The annual marketing program of the retailer.
The retailer’s policy towards:
New-to-market imported products and brands.
Premium and basic lines and niche products.
Volume of sales expected from the U.S. products.
Promotional support expected from U.S. exporters.
Retail pricing expected for the U.S. products.
Listing fees and other costs, if any, imposed on the U.S. exporters.
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 11
Purchasing policy, i.e. whether they purchase directly from overseas suppliers or via local
importers/distributors.
In addition, U.S. exporters should consider the following when planning to enter this retail sub-
sector:
Where the product fits in the retail market, e.g. as a mass market item, high-end niche item,
novelty/exotic item, seasonal festive/gift item, targeted at western expatriates, etc.
Price competitiveness of U.S. products versus comparable brands in the market.
Packaging size and quality that meets with customers’ expectations.
U.S. products which can be easily/readily registered as Halal products.
U.S. products which can be readily accepted as alternatives/substitutes to competing
products.
U.S. products that can be introduced into local food culture.
U.S. organic products and health food products that can meet retailer’s requirements.
U.S. products which provide convenience to customers.
The level of promotion, commitment to brand support and consumer education necessary for
successful launch and development of a new-to-market product.
Ability to meet retailer purchasing requirements and specifications.
3.1.3 Distribution channel
The chart below provides an overview of the distribution channel for imported food and beverage
products from U.S. exporters to supermarkets and hypermarkets. It is important to note that the larger
retailers prefer buying directly from overseas suppliers where possible to gain better pricing in order to
pass cost savings to their customers to remain competitive in the market.
U.S. Exporter
Succulent U.S. beef (left). Assortment of American cheeses (right).
(Source: FAS Kuala Lumpur)
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 12
Importer
Distributor
Supermarkets/Hypermarkets
It should be noted that some sub-distributors are also used to distribute products to stores located in
suburban areas.
3.2 Convenience stores and petrol station stores
3.2.1 Company profiles The convenience stores segment is dominated by 7-Eleven, the largest 24-hour convenience store in the
country that operates under Berjaya Retail Bhd. In addition, there are some 3,000 twenty-four hour
petrol station stores nation-wide operated by the other petroleum companies such as Petronas (Mesra),
Shell (Select), Petron (Treats), Caltex (Xpress Point) and BHPetrol (BHPetro Mart). The number of 7-
Eleven stores in each Malaysian state gives a good indication of the level of modernization of the retail
sector in each state in Malaysia. Today, 60% of 7-Eleven stores are located in the Federal Territory of
Kuala Lumpur, the states of Selangor and Johor, which gives a very good indication that these regions
hold the largest level of modern consumerism in Malaysia today.
The table below provides information on the major business involved in the operation of convenience
stores.
Retailer Name
and Outlet
Type Ownership
Sales
(US$ millions)
No. of
Outlets Location
Purchasing
Agent Type
7-Eleven
Malaysia Sdn.
Bhd
Berjaya
Retail Bhd.
Sales information
not released.
Largest
convenience store
operator.
1,905
outlets of
7-Eleven
stores
Nation-
wide
Local
distributors.
3.2.2 Entry strategy
U.S. exporters should view this as a secondary target providing incremental business, rather than as a
main target. They should consider developing distribution reach into this sub-sector through their
appointed distributors that service 7-Eleven and the petrol station stores. The new-to-market U.S.
exporters should consider the following matters when planning to enter the sub-sector:
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 13
U.S. products (halal certified) which are also targeted to the hypermarkets/supermarkets but are
packaged in single-serve or smaller sizes.
U.S. products which target children, young adults and convenience seekers.
Price competitiveness of the U.S. products versus competing local brands carried by stores
operating in this sub-sector.
3.2.3 Distribution channel
The distribution channel for the convenience stores and petrol station stores is similar to that existing for
the supermarkets. An example of the distribution channel to convenience store is shown below.
U.S. exporter
Importers
Distributors
Convenience stores 3.3 Traditional stores including provision, grocery and sundry shops
This sub-sector has remained highly fragmented. Although a large number of establishments have
remained in business for many years, this sub-sector is also characterized by operators that enter and
exit the sub-sector frequently. Because of the nature of this sub-sector, no single establishment
dominates. This sub-sector has remained important in the Malaysia market place as these businesses
continue to satisfy the needs of the mass market as they provide easy access to traditional products
which are now fast disappearing from the modern market place due to lack of branding, modern
packaging and preference for such traditional products.
3.3.1 Entry strategy
U.S. exporters should treat this sub-sector as a very low priority retail sector to target largely due to the
types of products retailed by such establishments. U.S. exporters that wish to enter this sub-sector
should supply highly price competitive products that:
Can easily fit into the local food culture
Can be accepted as alternatives to Asian products and brands.
New-to-market U.S. exporters should also carefully select major local distributors that have wide and
deep distribution capabilities which reach into this sub-sector.
3.3.2 Distribution channel
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 14
Traditional stores source their imported food and beverage products through local importers,
wholesalers, distributors or sub-distributors. This sub-sector is well-served by the larger and more
developed distributors with an established and complicated sub-distributor network because a large
number of these stores are located throughout the width and depth of the country, many demanding
small and irregular volumes of products.
4. Competition in the sector
The Table below summarizes the major supply sources for each product covered under this study, the
strengths of the key supply sources and the advantages and disadvantages of local companies.
Product
(2015)
Major
supply
sources
Strengths of key supply
countries
Advantages and
disadvantages of local
companies
Beef (fresh,
chilled or
frozen)
Import: 169,192
tons
US$ 554 million
(CIF value)
1. India -
76%
2. Australia
– 15%
3. New
Zealand –
6%
Halal certification approved
by Malaysian religious
authority.
India competes on price and
dominates the supply;
demanded largely by the low
end mass market food service
segment.
Australia dominates the
fresh/chilled segment in the
high end food service sector
with its halal beef.
There is insufficient supply of
local beef.
Chicken Cuts,
frozen
Import: 42,024
tons
US$ 89 Million
(CIF value)
1. China -
68%
2. Thailand
– 26%
3.
Netherland –
4%
4. Denmark
– 2%
Halal certification approved
by Malaysian religious
authority.
The import market targets
mainly the food service and
food processing sectors.
Malaysia is a major producer
of Halal chicken and an
exporter of poultry meat.
Local chicken is very price
competitive. Local consumers
still prefer fresh or chilled
chicken to frozen chicken.
There is an import restriction
on chicken.
Whole turkey,
frozen
1. U.S.A. –
One U.S. turkey plant was
certified ‘halal’ by the
Turkey is largely demanded
by the high end food service
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 15
Import: 115 tons
US$ 0.4 million
(CIF value)
72%
2. Brazil –
19%
3. Australia
– 5%
Malaysian government.
sector and by some western
expatriates residing in
Malaysia, for the festive
holidays. There is no
commercial supply of local
turkey.
Dairy
Import: 380,224
tons
US$ 1.0 billion
(CIF value)
1. New
Zealand -
47%
2. Australia
– 13%
3. U.S.A. –
10%
New Zealand leads in milk
powder, butter and is the
second largest supplier of
cheese and have long
established relationship with
importers.
Australia leads in liquid milk,
yoghurt and cheese and is the
second largest supplier of
butter.
The USA leads in whey, is the
second largest supplier of
milk powder, yoghurt and the
third largest supplier of
cheese.
Local companies are very
strong in liquid milk,
sweetened condensed milk,
canned milk powders, yogurt
and cultured milk drinks. They
are all very strong companies
with dominant shares within
their market segments.
Breakfast
cereals
Import: 9,322
tons
US$ 24.9
million (CIF
value)
1.
Philippines -
38%
2. Thailand
– 13%
3. China –
11%
4. USA –
8%
Branded market dominated by
Nestlé, Kellogg’s and Quaker.
Nestlé is supplied mainly
from the Philippines and
Thailand, targeting the mass
market. Post, Quaker,
Nature’s Path and Sweet
Home Farm are from the
USA, targeting the niche high
end market.
Nestle (Nestum) and Quaker
(Quaker Oatmeal) are locally
packed from imported
ingredients.
Infant food,
excluding dairy
products
Import: 57,133
tons
US$ 100 million
(CIF value)
1.
Netherlands-
39%
2.
Singapore -
27%
3. New
Zealand –
12%
The market is dominated by
cereal based infant food
(excluding dairy products).
Nestle Malaysia’s products
dominate the cereal based
infant food segment
(excluding dairy products).
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 16
USA – 1%
Snacks Foods;
Import: 65,729
tons
US$ 268.4
million
(CIF value)
1. China -
17%
2. Indonesia
- 11%
3. Thailand
– 9%
USA – 7%
China and Indonesia largely
supply Asian type snacks.
Local products dominate this
snacks market with a
widespread national
distribution reach. Malaysia’s
locally produced branded
products such as Jack & Jill,
Roller Coasters, Pringles and
Twisties compete on price
against imports
Baked products
Import: 38,439
tons
US$ 103.9
million (CIF
value)
1. Indonesia
– 21%
2. China -
19%
3. Thailand
– 16%
U.S.A. – 5%
China supplies a variety of
Nabisco biscuit products to
Malaysia as well as some
China biscuit brands.
Indonesia supplies Nabisco
Kraft’s biscuit products.
Thailand supplies Japanese
type biscuits.
Malaysian products dominate
both the cakes and sweet
biscuits segments with its
branded price competitive
products such as Julie’s,
Munchy, Hup Seng, Hwa Tai
and Danone’s products e.g.
Chipsmore, Jacob’s and alike.
Fresh vegetables
Import:
1,277,324 tons
US$ 697.1
million (CIF
value)
1. China -
57%
2. India -
15%
3. Thailand
- 5%
USA - 2%
China leads in potatoes,
garlic, cabbages, and carrots.
India is the largest supplier of
onions.
Thailand is the leading
supplier of Capsicum, and
cucumber.
Malaysia dominates the
market with its consistent
ability to supply good quality,
competitively priced
temperate vegetables.
It is a major exporter of fresh
Asian and temperate
vegetables to Singapore.
Frozen
vegetables
Import: 27,411
tons
US$ 20.2
million (CIF
value)
1. China -
29%
2. U.S.A. –
16%
3. Denmark
– 14%
China is the leading supplier
of frozen mixed vegetables.
Over 70% of China’s exports
are frozen mixed vegetables,
mainly targeted at the food
service sector.
USA is the largest supplier of
frozen potato products
(largely frozen French fries),
mainly targeted at the food
service. It also supplies frozen
cut potato under supermarket
house brands.
Malaysia produces some
frozen sweet corn. It is not a
major producer of frozen
vegetables.
Fresh fruits, 1. South South Africa is the largest Malaysia does not produce
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 17
temperate
Import: 335,883
tons
US$ 341.4
million (CIF
value)
Africa – 29
%
2. China -
24%
3. USA -
15%
supplier of apples, oranges,
lemons, plum, grapefruits and
the second largest supplier of
grapes and Mandarins.
China leads the market with
Mandarins and Chinese pears
and second largest supplier of
apples.
USA is the largest supplier of
grapes, cherries, strawberries,
raspberries, cranberries; the
second largest supplier of
oranges, plums, apricots and
the third largest supplier of
apples.
fresh temperate fruits.
Dried fruits
Import: 24,794
tons
US$ 30.8
million (CIF
value)
1. USA –
35%
2. Thailand
- 16%
3. Indonesia
– 10%
3. India –
9%
USA is the largest supplier of
dried grapes (raisin) and
prunes.
India is the largest exporter of
dried Tamarind to Malaysia.
Malaysia is not a major
supplier dried fruits.
Edible nuts
Import: 181,130
tons
US$ 171.5
million (CIF
value)
1. India -
21%
2. USA -
19%
3. China –
19%
3. Indonesia
– 16%
USA is the largest supplier of
shelled almonds, pistachio
and walnut.
China leads in the supply of
groundnuts and chestnuts.
Local brands such as Tong
Garden, Camel and Tai Sun
have a very strong presence in
the market.
Sugar
confectionery
Import: 20,802
tons
US$ 62.3
1. China -
33%
2. Vietnam-
19%
3. Thailand
– 14%
Thailand supplies Cloud 9,
Nabisko Kopiko, Strepsils,
Jack n Jill and various Thai
brands.
Malaysia supplies a large
variety of products targeted at
local consumers, including
Dino, Camel, Santa, Hacks,
Hudson’s and alike.
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 18
million (CIF
value)
USA – 2%
Chocolates &
Other Food
Preparation
Containing
Cocoa
Import: 23,204
tons
US$ 143 million
(CIF value)
1.
Singapore -
13%
2. U.S.A.–
11%
3. China –
11%
4. Italy –
11%
USA supplies Hershey Kisses
and Bars which provide an
alternative product to
chocolate lovers.
Malaysia produces a number
of good quality chocolate
products. Local manufacturers
mainly target consumers that
prefer chocolates in
conveniently packed single
serve bars as well as large bars
as well as party packs and in
gift boxes.
Locally manufactured
chocolates include well-
known brands such as
Cadbury, Vochelle and
Beryl’s.
Sauces and
seasonings
Import: 58,742
tons
US$ 112 million
(CIF value)
1. China –
27%
2. Thailand
- 25%
3.
Singapore –
12%
4. Indonesia
– 9%
U.S.A. – 8%
Thailand is a major supplier
of fish sauce and chili sauce.
Singapore supplies high
quality price competitive
Asian sauces such as sambal,
satay, chicken rice sauce and
alike.
China is a major supplier of
other high end Asian sauces
such soya sauce, oyster sauce,
plum sauce and alike.
The USA is a major supplier
of western sauces such as
salad dressing, spaghetti
sauce, mixed condiments,
barbeque sauce, black pepper
sauce, Thousand Island
Dressing, salad cream, salsa
and alike.
Locally produced soya sauce,
tomato sauce and other Asian
sauces have a very strong
presence in the market.
Non-alcoholic
beverages
Import: 146
million liters
1. Thailand
- 35%
2. U.S.A. –
16%
3.
Singapore -
Thailand leads in supply of
pineapple juices, cordials and
Asian drinks as well as other
non-alcoholic drinks.
The USA is the largest
supplier of tomato juice and
Local branded mineral water,
juices, cordials and soft drinks
dominate the market.
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 19
US$ 147.6
million (CIF
value)
11%
mixed fruit and/ vegetable
juices to Malaysia with
products such as Welch’s, Del
Monte, Minute Maid, Ocean
Spray.
Wine
Import: 10.4
million liters
US$ 93.4
million (CIF
value)
1. Australia
- 45%
2. France –
16%
3. China –
12%
4. Chile –
6%
USA - 2%
Australia has developed a
higher presence in the market
because of its price
competitive New World grape
wines and strong brand
presence.
France dominates the food
service market and competes
on quality and price.
USA supplies well-known
brands of New World wines
to both the retail and food
service sectors.
Malaysia does not produce
any grape wine.
Beer
Import: 64.8
million liters
US$ 76.1
million (CIF
value)
1.
Singapore -
27%
2.
Netherlands -
20%
3. China -
14%
USA- 3%
Singapore is a major re-
exporter of foreign beer into
Malaysia, including beers
from Belgium, Denmark,
Germany and Mexico. Most
of these are very price
competitive beers with brands
that are not well-known to the
consumers.
Netherlands exports Grolsch
and Breda which is supplied
to the mid to high end
western-style food service
sector in the major cities and
tourist centers such as
Langkawi.
China exports TsingTao and
Yanjing beers to Malaysia.
The market is dominated by
locally brewed beers.
Malaysia has two major
breweries that are aggressive
brand driven businesses which
proactively protect their
market shares.
Spirits
1. France -
38%
UK dominates in the supply
of whiskies, rum and Gin.
Local production is
negligible.
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 20
Import: 29.2
million liters
US$ 403.1
million (CIF
value)
2. UK -
27%
3.
Singapore -
13%
4.
Netherlands
– 9%
USA –
0.6%
France and Netherlands
dominate the brandy sector
with their well-known brands.
Pet food
Import: 70,012
tons
US$ 106.2
million (CIF
value)
1. Thailand
- 63%
2. USA -
12%
3. China –
5%
4. Australia
– 4%
The market is dominated by
Pedigree & Whiskas
(Thailand), Friskies
(Australia), and Purina
(Thailand & USA). Thailand
also supplies very price
competitive CP Smartheart
(Thai brand).
Malaysia does not produce
any processed and packed pet
foods.
(Source: Department of Statistics, market observations and trade comments)
5. Best products prospects
Category A: Products Present in the Market That Have Good Sales Potential
Product
category
2011
Imports
2015
Imports
5 year
Average
Annual
Import
Growth
Rate
Import
Tariff
Rate
Key
constraints
over market
development
Market
attractiveness
for USA
Breakfast
cereals
12,465
tons
US$
28.9
million
(CIF
9,322
tons
US$
25.1
million
(CIF
4% growth
per annum.
2-5% duty
charged on
oats
products.
Other
products
incur 7%
Strengths of
Nestlé and
Kellogg’s in
the market.
Category A.
An attractive
market for long
term
development
based on higher
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 21
value) value) duty. disposable
incomes and
related
changing eating
habits.
The breakfast
cereals market
has not been
fully exploited
yet and can be
further
developed and
expanded.
Snack
Foods
57,529
tons
US$
213.8
million
(CIF
value)
65,729
tons
US$
268.4
million
(CIF
value)
10%
growth per
annum.
6% import
duty
Strong
competition
from price
competitive
good quality
locally
produced
branded
products.
Category A.
Malaysians
snack all day.
This market
continues to be
attractive for
well-known
brands from the
USA,
particularly
new product
types not yet
available in the
Malaysian
market. U.S.
exporters
should
capitalize on
the growth in
this market.
Frozen
vegetables
16,926
tons
US$
15.1
million
(CIF
value)
27,411
tons
US$
20.2
million
(CIF
value)
7% growth
per annum.
Nil except
for frozen
sweet corn
which
attracts 5%
import
duty.
Products are
mainly
demanded by
the food
service sector
(western style
restaurants) as
most
consumers
prefer fresh
vegetables
Category A.
Good prospects
continue to
exist for certain
frozen
vegetables
supplied by the
USA that are in
demand by
Malaysian
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 22
which are
readily
available all
year round.
consumers.
Note: Food
service demand
continues to be
important.
Fresh
fruits,
temperate
348,639
tons
US$
211
million
(CIF
value)
335,883
tons
US$
341.4
million
(CIF
value)
13%
growth per
annum.
5% import
duty
except for
fresh
oranges
which
attracts no
import
duty.
Growth in
demand is still
being seen in
oranges,
mandarins,
grapes, pears
and apples as
well as stone
fruits and
berries while
demand is
declining for
kiwifruits.
Category A.
Opportunities
exist for US
exporters to
capitalize on
growth in the
berries and
stone fruits
segment as
consumers are
looking for
alternatives and
are becoming
more familiar
with them.
There are
opportunities to
supply of
mandarins and
tangerines
which are in
huge demand
around the
Chinese New
Year periods.
Potential exists
for new
varieties of
apples, pears
and oranges to
create impetus
for further
growth.
Dairy 288,828
tons
US$
994.9
million
437,357
tons
US$ 1.1
billion
(CIF
2%
growth per
annum.
20%
import
duty on
liquid milk
(in quota),
50%
High levels of
existing
competition
for market
share amongst
key suppliers,
Category A for
Yoghurt, infant
milk powder,
cheese
products.
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 23
(CIF
value)
value) import
duty on
liquid milk
(out of
quota), 5%
import
duty on
frozen
milk and
other milk
powder
under HS
040291.
Nil for
other
products.
both local and
overseas,
making new
entry difficult
and costly.
The USA is
the second
largest
supplier of
yoghurt and
milk powder
and the third
largest
supplier of
cheese.
Good sales
potential exists
particularly for
retail packed
infant milk
powder, pizza
cheese and
other grated
cheese.
Category C for
other retail
packed dairy
products.
This segment is
not so attractive
for other retail
packed dairy
products.
Chocolates 20,689
tons
US$
122.7
million
(CIF
value)
23,204
tons
US$ 143
million
(CIF
value)
15%
growth per
annum.
15%
import
duty
charged
Strong
competition
from locally
manufactured
branded
products.
Category A.
Opportunities
exist in
supplying gift
chocolates,
novelties and
exotic
chocolate
products to
capitalize on
festive
demands
during the year
end gift giving
period.
Sauces and
seasonings
36,553
tons
US$
75.8
million
(CIF
value)
58,742
tons
US$ 112
million
(CIF
value)
14%
growth.
The
market is
dominated
by local
Asian
sauces, but
all western
sauces and
10%
import
duty for
soya sauce
and tomato
sauce and
similar
sauces.
5% import
Very strong
competition
from local
soya sauce
and tomato
sauce which
meet closely
with
consumer
taste and price
Category A.
Opportunities
exist to
continue to
supply to the
retail sector,
particularly
western sauces
not
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 24
seasonings
are
imported.
duty for
other
sauces
except for
prepared
mustard
which is
nil.
expectations.
USA has
created a
strong
position in
supplying
western
sauces to
Malaysia.
manufactured
in Malaysia.
Non-
alcoholic
beverages
119.3
million
liters
US$
129.4
million
(CIF
value)
146.5
million
liters
US$
147.7
million
(CIF
value)
18%
growth.
The
market is
dominated
by local
products
which
meet
closely
with
consumer
taste.
Import
growth is
mainly in
un-
sweetened
beverages,
including
bottled
water and
fruit
juices.
Nil for
fruit juices,
except for
pineapple
juice
which
attracts
20%
import
duty and
guava
juice
which
attracts 6%
import
duty.
20%
import
duty on
mineral
and
aerated
water and
other non-
alcoholic
beverages.
Very strong
competition
from local
products and
brands which
meet closely
with
consumer
taste and price
expectations.
Category A.
Opportunities
exist for US
exporters to
supply juices
(fruits and
mixture of
fruits and
vegetables),
sparkling juices
(for festive
seasons and
celebrations) as
well as
products that
can be targeted
at the growing
health food and
organic food
segments of the
market.
Wine 6
million
liters
US$
79.2
million
(CIF
10.4
million
liters
US$
93.4
million
(CIF
15%
growth per
annum.
Import
duty of
RM23 per
liter for
sparkling
wine.
Import
duty of
RM7 per
Wine is being
consumed by
the younger
generation of
adult urban
Malaysian
Chinese and
Indians,
particularly
Category A.
Opportunities
exist for US
exporters to
expand this
market for their
new world
wines as
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 25
value) value) liter for
other
wines.
Excise
Duty of
15% and
RM34/Ltr
for
sparkling
wine or
15% and
RM 12/Ltr
for other
grape
wines.
those
educated
abroad and/or
are well-
travelled.
increasing
number of
young
Malaysians
acquire a taste
for wines as
opposed to
whiskey and
brandy.
Pet food 33,473
tons
US$
74.6
million
(CIF
value)
70,012
tons
US$
106.3
million
(CIF
value)
11%
growth per
annum.
Nil
It is
increasingly
fashionable
for the middle
to upper
income
groups to own
exotic pet
dogs and cats.
Few
constraints/
barriers exist
under
conditions
where
disposable
income is
growing.
Category A.
This market
continues to be
attractive for
the USA and
US exporters
should
capitalize on
the growth in
this market.
Category B: U.S. Products not Present in Significant Quantities in the Market That Have Good
Sales Potential
Product
category
2011
Imports
2015
Imports
5 year
Average
Import
Tariff
Key
constraints
Market
attractiveness
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 26
Annual
Import
Growth
Rate
Rate over market
development
for USA
Baked
products
28,718
tons
US$ 68.1
million
(CIF
value)
38,439
tons
US$
103.9
million
(CIF
value)
14%
growth.
Fast
growing
market,
popular
amongst all
consumers,
particularly
cakes and
sweet
biscuits
eaten as a
snack.
6% on
sweet
biscuits,
waffles
and
wafers,
un-
sweetened
biscuits.
Nil for
other
baked
products.
Strong
competition
from price
competitive
good quality
locally
produced
branded
products.
Category B.
Malaysians
like to snack
all day long.
Baked
products
popular
snacks.
U.S. exporters
should
capitalize on
the growth in
this market
and consider
exporting
unique and
exotic
products of
acceptable
taste and
flavor,
products not
readily
available in
this region.
Fresh
vegetables
1,021,256
tons
US$
573.1
million
(CIF
value)
1,277,324
tons
US$
697.1
million
(CIF
value)
5% growth
per annum.
Nil Competition
from local
suppliers and
China which
supply
mainly Asian
vegetables to
the market.
The bulk of
demand is
for Asian
fresh
vegetables.
Category B.
Demand for
fresh
temperate
vegetables
will continue
to grow as
more varieties
are adopted
into local food
cul-ture,
particularly
broccoli,
cauli-flower,
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 27
carrots and
asparagus.
Dried
fruits
24,501
tons
US$ 27.4
million
(CIF
value)
Imports:
24,794
tons
US$ 30.7
million
(CIF
value)
17%
growth
mainly for
dried
Tamarind
products
5%
import
duty
applies.
Nil on
dried
dates and
dried
grapes.
Maturing
market for
traditional
dried fruits
such as
raisins and
prunes.
Slow growth
in dried fruits
such as figs,
avocado,
apricot,
apple, peach
and other
dried fruits.
Category B.
U.S. exports
dominate the
raisins
segment and
continue to
have a major
share in dried
prunes.
Opportunities
exist to supply
to the growing
health food
and organic
food segments
of the retail
market.
Category C: U.S. Products not Present in the Market Because They Face Significant Barriers
Product
category
2011
Imports
2015
Imports
5 year
Average
Annual
Import
Growth
Rate
Import
Tariff
Rate
Key
constraints
over market
development
Market
attractiveness
for USA
Chicken
Cuts,
frozen
40,155
tons
US$
102.7
million
(CIF
value)
42,042
tons
US$
89.4
million
(CIF
value)
8% growth
per annum
Imports
fluctuate
from year
to year,
depending
on the local
supply
situation.
Market is
dominated
by local
chicken.
Import duty
of 20% (in
quota) and
40% (out of
quota).
Halal
certification
approved by
Malaysian
religious
authority is
required. Well-
developed
local poultry
farming
industry.
Category C.
This market
continues to be
a challenge the
market is
already well
served by local
sources. There
is an import
restriction on
chicken.
Dairy 236,325 380,224 9% growth 20% import High levels of Category C for
GAIN REPORT: Retail Foods Annual 2016 – MY6011 Page 28
tons
US$
922.6
million
(CIF
value)
tons
US$ 1.0
billion
(CIF
value)
per annum.
duty on
liquid milk
(in quota),
50% import
duty on
liquid milk
(out of
quota), 5%
import duty
on frozen
milk and
other milk
powder
under HS
040291.
Nil for
other
products.
existing
competition
for market
share amongst
key suppliers,
both local and
overseas,
making new
entry difficult
and costly.
The USA is
the second
largest
supplier of
yoghurt and
milk powder
and the third
largest
supplier of
cheese.
other retail
packed dairy
products.
This segment is
not particularly
attractive for
other retail
packed dairy
products.
Category A for
Yoghurt, infant
milk powder,
cheese products
targeted at the
middle to high
income
consumers.
There is good
sales potential
particularly for
retail packed
infant milk
powder, pizza
cheese and
other grated
cheese.
END OF REPORT.